SK Ecoplant Raises IPO Valuation with Semiconductor Cluster Construction in Yongin

Semiconductor Industrial Complex PF Financing Kicks Off
Significant Expansion Expected in Affiliate Plant Sales Ratio
Corporate Value Enhancement Effect Upon Listing

[Asia Economy Reporter Lim Jeong-su] SK Ecoplant (formerly SK Construction) has officially begun preparations for the development project of the Yongin Semiconductor Cluster, where SK Hynix will be located. After completing project approval and land compensation procedures, full-scale construction is planned to commence early next year. The large-scale construction volume originating from SK Hynix and surrounding development projects are expected to increase the company's valuation ahead of its initial public offering (IPO).

According to the investment banking (IB) industry on the 27th, Yongin General Industrial Complex Co., Ltd., the operator of the Yongin Semiconductor Cluster general industrial complex, has partially raised project financing (PF) funds necessary for the project under the management of SK Securities. The maturity is three months, and it is known to be a bridge loan preceding the main PF worth trillions of won.

SK Ecoplant, which is in charge of construction, provided joint guarantees for the PF loan. If Yongin General Industrial Complex fails to repay the loan, SK Ecoplant will bear the repayment responsibility on its behalf. It is expected that credit support such as joint guarantees or payment guarantees will also be provided during the future large-scale main PF fundraising process.

The Yongin Semiconductor Cluster is a large-scale industrial complex of approximately 4.16 million square meters to be established by 2024 in Wonsam-myeon, Cheoin-gu, Yongin City. The industrial complex plan was approved in the first half of this year, and after land compensation, full-scale construction is scheduled to begin early next year. It will form a semiconductor belt along with nearby industrial complexes such as Icheon SK Hynix Semiconductor and Pyeongtaek Godeok Samsung Semiconductor.

In this process, SK Ecoplant, SK Group’s construction affiliate, is expected to enjoy special demand. It is common for SK Ecoplant, the affiliated construction company, to handle the construction of SK Hynix’s semiconductor factories to prevent technology leakage and other issues. SK Hynix plans to invest a total of 122 trillion won, including four fabs (fabrication plants), infrastructure, and research facilities to be built within the industrial complex. Given the scale of this mega project, SK Ecoplant’s order volume is also expected to increase rapidly.

Despite reductions in overseas chemical plant and domestic power plant construction projects, SK Ecoplant’s plant sales ratio expanded to 63% last year due to increased semiconductor facility construction for SK Hynix. The proportion of affiliate sales rose from 19% in 2016 to 44% last year, driven by SK Hynix’s semiconductor investment expansion. Last year, affiliate sales reached 3.3 trillion won.

An IB industry official said, "Although the increase in affiliate order volume will immediately increase working capital burdens, it will lead to a significant increase in sales in the future," adding, "Thanks to affiliate sales, a substantial rise in valuation can be expected at the IPO anticipated in 2023."

This content was produced with the assistance of AI translation services.